Inactivation of the adenomatous polyposis coli (APC) tumor suppressor triggers the development of colorectal, duodenal, and gastric polyps and carcinoma. APC is a critical effector in the evolutionarily conserved Wnt/ss-catenin signal transduction pathway, which directs cell proliferation, differentiation, and death during metazoan development, and is aberrantly activated in several types of cancer. The objective of our research is to understand the mechanisms by which APC regulates the activity of the Wnt pathway. We have developed a powerful genetic system in Drosophila to study APC function, and to identify effectors that determine the cellular consequences of APC loss. Our findings have revealed, unexpectedly, that fly APC homologs have dual positive and negative regulatory roles in Wnt transduction that are mediated by structurally distinct domains. We found that in addition to a well-documented negative regulatory role in destabilizing ss-catenin, APC also promotes Wnt transduction by mediating the degradation Axin, a negative effector of Wnt signaling. We propose to determine the mechanisms by which APC mediates Axin degradation using a combination of genetic, cell biological, and biochemical approaches. In addition, we propose to characterize one regulator of the cellular response to Apc loss that was revealed in our genetic screens. We anticipate that this work will inform our understanding of APC function and Wnt signal transduction.